Warner Music Group (WMG) has released the financial results for its first fiscal quarter ended December 31st, 2018.
According to Warner, the music company’s revenue surpassed $1.2 bn for the first quarter which is up by 15% from the company’s first quarter in 2018. Warner Music Group enjoyed the increase in revenue from $1.045 bn in the corresponding period in the prior year, while also seeing net income rise to $86 mn from $5 mn.
Music Publishing revenue rose $22 mn, or 15.4 %, but was partially offset by a decline in the mechanicals reflecting the continuing trend of music consumers away from physical product to streaming.
“Our first-quarter results are evidence that our long-term strategy is paying off,” Warner Music Group’s executive VP and CFO Eric Levin said in a statement. “Our Recorded Music business alone exceeded $1 billion in revenue, and we also had strong OIBDA and cash flow.”
Digital revenue including streaming and downloads grew 18 % to $627 mn. Operating income experienced strong growth of 63 % to $147 mn. Operating Income Before Depreciation and Amortization rose 38.7 % to $215 mn. This included a net $8 mn benefit from M&A – Mergers and Acquisitions and an $18 mn benefit from the adoption of ASC 606, a new accounting standard.
WMG also confirmed recorded music revenue saw a net gain of $76 mn from its acquisition of EMP Merchandising last September.
Operating income jumped to $22 mn, up from $1 mn in operating loss. Operating margin also increased by 13.3 %, up from -0.7 %.
Music publishing OIBDA rose to $39 mn. OIBDA margin improved 23.6 %, up from 11.9 %. These two were positively affected by the acceptance of ASC 606, resulting in a $24 mn gain. However, music publishing OIBDA declined due to a revenue mix from the same accounting standard.
Warner/Chappell’s revenue rose 15.4 % to $22 mn. This number was lifted by a $26 mn gain from the adoption of ASC 606. Mechanical revenue fell $3 mn year-over-year.